This is a CU Colorado Springs student blog for the following courses: Intermediate Microeconomics and Austrian Economics.

December 15, 2014

Interventionism

Mises was a huge supporter of minimal government intervention in the market. I strongly agree with him on this subject. Interventionism is almost always detrimental, even if a policy's implemented with the best intentions.

For example, a minimum wage is put in place to benefit the lower income populace. However, a minimum wage not only hurts the employers, but it can have a negative affect on current employees and prospective individuals looking to enter the labor market.

If an employer values a potential employee at a price that's lower than what the minimum wage is set at, then the employee will most likely not get hired even if he or she is willing to work at a lower wage. Also, raising the minimum wage results in forcing employers to allocate their funds however the government mandates them to. This can lead to a large number of people getting let go. Additionally, if an employee is worth a higher wage than the minimum wage, but the employer is forced to raise the wages of all the employees, then the higher producing individuals might not receive the raise he or she deserves.

All in all, government intervention might be enforced to help the impoverished, but generally it leads to a negative affect on the entire market.

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